UK House Price Growth Slows to 1.8% Amid Economic Uncertainty
Bank of England holds rates as geopolitical tensions impact market activity and household transitions.
Sarah Connor
Annual house price growth in the UK slowed to 1.8% in July, Nationwide reported, as the Bank of England maintained its base rate at 3.75% on Thursday.
Market activity and house prices remain soft in recent months. Robert Gardner, Nationwide's Chief Economist, confirmed this trend.
Geopolitical tensions continue to drive market volatility. The conflict between Iran and the US has pushed energy prices and market interest rates upward in recent weeks.
Financial market expectations for the Bank Rate's future path show volatility. Views on the inflationary implications of both domestic and international events are shifting rapidly.
Homeowners with a mortgage have resided in their current homes for an average of almost nine years.
Those in the private rented sector tend to have the shortest time in a property. Around half of those in the private rented sector reside in their current property for two years or less.
Nationwide reported nearly 200,000 households previously in the private rented sector became owner-occupiers in 2024-25. Conversely, around 100,000 households moved into private rented properties after being owner-occupiers.
Despite overall market softness, net borrowing of mortgage debt in the UK increased to £7.7 billion in June. This marked a significant rise from £3.3 billion in May.
Mortgage approvals for home purchases also rose to 58,200 in June, up from 56,600 in May. HM Revenues & Customs reported a 2% year-on-year rise in residential property transactions, reaching 98,700.
Speculation over incoming policy changes under the new Prime Minister may hold the property market back. Rob Wood, an economist at Pantheon Macroeconomics, cited rumors of higher property taxes introduced by Andy Burnham, the Mayor of Greater Manchester.
The housing market has not stalled but has become more selective.
Property experts and brokers confirm the market requires incentives. They note that national figures do not account for local variations, such as rising prices in the north contrasting with declines in the south.
Chris Barry, a director at estate agency Stirling Ackroyd, states serious buyers are not registering their interest in numbers seen earlier in 2024. Stephen Perkins, managing director at Yellow Brick Mortgages, maintains the housing market has not stalled but has become more selective.
Property experts and brokers also report a slowdown in business enquiries. The market adjusts to higher borrowing costs amid Nationwide's continued assessment of a 'soft' market.